At White House, Top Lawmakers Say They Expect Budget Deal

President Obama met with Congressional leaders of both parties Friday morning at the White House.Credit
Stephen Crowley/The New York Times

Democratic and Republican leaders of Congress emerged from their first budget meeting with President Obama at the White House at midday Friday and, in a rare show of bipartisan bonhomie, jointly expressed confidence that the two parties will reach an agreement before the end of the year to avert economy-rattling tax increases and across-the-board spending cuts.

The four leaders – two Republicans, John A. Boehner, the House speaker, and Mitch McConnell, the Senate minority leader; and two Democrats, Harry Reid, the Senate majority leader, and Nancy Pelosi, the House minority leader – politely took turns at a microphone outside the West Wing, addressing each other by first names and describing the 70-minute session as constructive.

“We feel very comfortable with each other, and this isn’t something we’re going to wait until the last day of December to get it done,” Mr. Reid said.

“This isn’t the first time that we’ve dealt with these issues,” he said. “We feel we understand what the problem is. And we felt very – I feel very good about what we were able to talk about in there. We have the cornerstones of being able to work something out. We’re both going to have to give up some of the things that we know are a problem.”

“To show our seriousness,” he added, “we put revenue on the table as long as it’s accompanied by significant spending cuts.”

His Senate counterpart, Mr. McConnell, made plain that Republicans were talking about spending for the entitlement programs, chiefly Medicare and Medicaid, which are growing fast as the population ages and, along with military spending, are squeezing everything else in the federal budget. Republican senators, Mr. McConnell said, “fully understand that you can’t save the country until you have entitlement programs that fit the demographics of the changing America in the coming years.”

“We’re prepared to put revenues on the table,” he added, “provided we fix the real problem, even though most of my members, I think without exception, believe that we’re in the dilemma we’re in not because we tax too little but because we spend too much.”

Ms. Pelosi, whose House Democratic colleagues include many liberals who resist significant changes to entitlement spending, said: “We understand our responsibility here. We understand that it has to be about cuts, it has to be about revenue, it has to be about growth, it has to be about the future.” She added, “I feel confident that a solution may be in sight.”

With Mr. Obama in the Roosevelt Room, the leaders made up the same cast who bitterly fought in 2011, then eventually agreed to nearly $1 trillion in spending cuts over 10 years but deadlocked on the roughly $4 trillion “grand bargain” both sides say the country needs.

Mr. Obama demands that it include up to $1.6 trillion in tax increases for the wealthy, while Republicans favor less in revenue but big cost-saving changes to Medicare and Medicaid.

The talks began on a friendly note, as well: With reporters and cameras briefly allowed into the room, the president wished a happy birthday to Mr. Boehner, who turns 63 on Saturday.

The two sides met after a tense week of postelection, pre-bargaining positioning. Mr. Obama, after making an issue of it in his re-election campaign, claims a mandate to insist on extending the Bush-era tax cuts, which otherwise expire on Dec. 31 — but not for income of $250,000 and above for couples and $200,000 for individuals.

More broadly, the outcome of the budget talks will go a long way toward defining his leverage for a second term, both in terms of his influence and the resources available to him to press his agenda.

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Negotiating the Federal Budget

Megan Liberman interviews Jared Bernstein, a former economic adviser to Vice President Joseph R. Biden Jr., on his experience in negotiating the federal budget.

The president “will not sign, under any circumstances, an extension of tax cuts for the top 2 percent of American earners,” his spokesman, Jay Carney, told reporters on Thursday.

“We have to make sure that taxes don’t go up on the middle class, that the economy remains strong,” Mr. Obama said as the meeting began.

“That’s an agenda that Democrats and Republicans and independents, people all across the country share,” he said. “So our challenge is to make sure that we are able to cooperate together work together find some common ground, make some tough compromises, build some consensus to do the people’s business.”

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“My hope is, is that this is going to be the beginning of a fruitful process where we’re able to come to an agreement that will reduce our deficit in a balanced way, that we will deal with some of these long-term impediments to growth,” he added.

Republican leaders, for their part, have signaled since their losses for the White House and in Congress that they would agree to additional tax revenues, but they oppose raising the top marginal rate, which is now 35 percent and scheduled to return to 39.6 percent, the Clinton-era level, on Jan. 1.

And Republicans are holding out for significant future savings from Medicare and Medicaid, which Mr. Obama and his party also support as necessary to controlling the mounting federal debt in an aging population – to a limit. Still, many liberal Democrats are mobilizing against entitlement program cuts, especially after a campaign in which Republicans and their standard-bearer, Mitt Romney, attacked Mr. Obama and the Democrats for having enacted Medicare reductions as part of the 2010 health-care law.

All four Congressional leaders will remain in their senior posts, both for the lame-duck session that started this week and the new Congress that starts in January. The lame-duck session could last through the holidays unless the parties can reach an agreement on a budget deal to avoid a so-called fiscal cliff after Jan. 1, when the country would be hit by more than $500 billion in tax increases – mainly from the expiration of the Bush tax rates – and across-the-board cuts in military and domestic spending absent a bipartisan compromise on an alternative package of deficit-reduction.

Such large and sudden action could cause a short recession, the Congressional Budget Office has warned; any negotiated alternative would spread the budget cuts over a longer period to avoid harming the still-weak economy.

Mr. Obama, in a news conference on Wednesday, alternately sounded conciliatory and uncompromising as he ratcheted up the pressure on Republicans to immediately agree to extend the Bush-era tax cuts for 98 percent of Americans.

He announced the meeting a week ago, in his first post-election public statement, saying last Friday, “The American people voted for action, not politics as usual. You elected us to focus on your jobs, not ours.”

He acknowledged then, and since, that both parties would have to make changes to bring down the growing long-term costs of the government health programs. “But,” he added, “as I’ve said before, we can’t just cut our way to prosperity. If we’re serious about reducing the deficit, we have to combine spending cuts with revenue – and that means asking the wealthiest Americans to pay a little more in taxes.”

Mr. Reid said the parties would work over the Thanksgiving holiday and meet again the following week. Mr. Obama leaves on Saturday for a four-day diplomatic trip to Asia.

Ms. Pelosi said afterwards that it is important to set deadlines and show signs of progress in the next few weeks in order to instill “confidence” in consumers and financial markets.

Mr. Obama’s activities since the election week have signaled his intent -- not just for now but for the second term -- to use his bully pulpit and to keep lines open to outside constituent groups and the public even as he works with leaders of Congress on the insiders’ game of negotiating the minutiae of legislation. After Thanksgiving, he occasionally will campaign around the country for his position.

The session with Congressional leaders followed his meetings earlier this week with leaders of unions, progressive groups and corporate executives. Later on Friday Mr. Obama will meet with more than a dozen representatives of civic, civil-rights, disability and anti-poverty groups and organizations representing both older and young Americans.

Participants will include Benjamin Todd Jealous, president of the N.A.A.C.P.; civil rights activist and MSNBC talk-show host Al Sharpton; Chad Griffin, president of the Human Rights Campaign, and A. Barry Rand, head of AARP, the lobby group for older Americans. Also invited is Sister Simone Campbell, who led the “Nuns on the Bus” tour for social justice this summer and spoke at the Democratic National Convention, where she decried Republican budget plans as “immoral.”